German inflation rate drops to 2.2 pct in March

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BERLIN, April 12 (Xinhua) -- The inflation rate in Germany fell to 2.2 percent in March, marking its lowest level since May 2021, according to confirmed figures published by the Federal Statistical Office (Destatis) on Friday.

"The inflation rate has decreased further," Destatis President Ruth Brand said in a statement. In February, the rate fell to 2.5 percent.

Brand also noted that the prices of energy and food had a dampening effect on inflation for the second consecutive month.

For the first time since February 2015, food prices showed a year-on-year decrease, down by 0.7 percent compared to a year earlier. Prices for fresh vegetables, sunflower oil and rapeseed oil fell sharply by more than 20 percent, while fruit and olive oil prices rose faster than overall inflation.

Similarly, energy prices fell by 2.7 percent year over year in March, according to Destatis, despite the expiry of the government's relief measures, which include price brakes and reduced tax rates.

However, despite the overall easing of price pressures, consumer sentiment in Germany is recovering slowly, according to a monthly index published jointly by the market research institute GfK and the Nuremberg Institute for Market Decisions (NIM).

"In times of multiple crises, the high degree of consumer uncertainty, paired with low confidence in Germany's economic development, is holding back the willingness to buy," said Rolf Buerkl, a consumer expert at NIM. As a result, domestic demand still fails to stimulate the economy, Buerkl added.

The German economy, which slipped into recession last year, is anticipating a boost from an imminent reduction in key interest rates by the European Central Bank (ECB). The ECB, however, announced its decision to keep its interest rates unchanged on Thursday.

Marcel Fratzscher, president of the German Institute for Economic Research, criticized the ECB decision, saying it had "missed the opportunity to initiate the necessary change of course in its interest rate policy."

Leading German economic research institutes have expected inflation in the country to slow significantly to 2.3 percent in 2024 from last year's 5.9 percent, while the ECB is aiming for a eurozone inflation rate of 2 percent. Enditem

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